Diageos EABL to rival SABMiller after securing Serengeti Breweries

Diageo's EABL to rival SABMiller after securing Serengeti Breweries

Diageo's East African Breweries Ltd has acquired a 51% stake in Serengeti Breweries for US$60.4m, positioning the brewer to challenge SABMiller in Tanzania's beer market.

Diageo announced today (26 October) that East African Breweries has completed the deal for Serengeti, following shareholder backing and regulatory clearance in Tanzania.

East African Breweries agreed to offload a 20% stake in the market leader, SABMiller-controlled Tanzania Breweries, in order to gain control of Serengeti. A Diageo spokesperson told just-drinks today that the Tanzania Breweries stake sale was "still pending".

Diageo's move for Serengeti intensifies the rivalry between itself and SABMiller in Africa's growing beer sector.

While Serengeti Breweries is the number two player in Tanzania by volume, its market share rose by 10% to 17% between 2006 and 2009. Diageo said today that the brewer has a 28% share of the branded beer category, thanks to its Serengeti Premium Lager, and is building a third brewery in the country.   

Outside of Tanzania, Serengeti Breweries (SBL) will boost capacity for East African Breweries (EABL). "SBL will form an integral part of EABL’s East African supply footprint providing additional capacity to Kenya and Uganda," said Diageo, which owns a 50.03% stake in EABL.

Yesterday, Diageo's head of global supply, David Gosnell, said that the Guinness brewer would invest US$100m in African beer operations during its current fiscal year, to the end of June 2011.